David Koch has urged the Reserve Bank of Australia to keep rates on hold when it meets next week, citing concerns about households on the brink.
The Compare the Market economic director and former breakfast TV host said a fourth rate rise could create a triple whammy for people already dealing with fuel and grocery price pressures.
Compare the Market’s economic director David Koch. Supplied
“Australian households are doing it tough,” Koch said.
“Yes, inflation is going up, but that’s not because of consumers spending too much.
“It’s things outside of their control like petrol prices going up because of the conflict in the Middle East.
“Essentially, they’re getting another rate hike when they go to fill up the car.”
Koch called on the federal government to reduce spending instead to help bring down inflation.
Reserve Bank Governor Michele Bullock has warned households of a potential fourth cash rate hike due to stubborn above-target inflation.
“The board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed,” she said in late July.
But the latest inflation figures surprised the market, with headline inflation cooling from 4 per cent in the 12 months to May to 3.8 per cent in June.
The trimmed mean, the Reserve Bank’s preferred measure of core inflation, remained steady as expected.
Reserve Bank of Australia Governor Michele Bullock. Louise Kennerley
Treasurer Jim Chalmers said the figures were an encouraging outcome and showed there has been progress on inflation but warned about global volatility.
“We already had an inflation challenge in our economy, but the war is making it higher than it would otherwise be,” he said last week.
“Treasury has warned that the next phase of the conflict could be more challenging for the global economy, with the oil market now more vulnerable.”
Following the news, Westpac joined the rest of the big four banks in predicting the central bank will hold rates for the remainder of the year before delivering at least two cuts next year.
ANZ, Commonwealth Bank and Westpac predict the interest rate to be 3.85 per cent by the end of next year, while NAB has the most optimistic prediction of 3.60 per cent.
The Reserve Bank will meet again next week and deliver its rate decision on Tuesday.